Fiscal Policy and the Current Account

Fiscal Policy and the Current Account

This paper examines the relationship between fiscal policy and the current account, drawing on a larger country sample than in previous studies and using panel regressions, vector autoregressions, and an analysis of large fiscal and external adjustments. On average, a strengthening in the fiscal bal...

Ausführliche Beschreibung

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Bibliographische Detailangaben
Hauptverfasser: Fund, International Monetary, Abbas, S. M. Ali, Velloso, Ricardo
Format: Buch
Sprache:eng
Schlagworte:
And Finance
Econometric models
Economic Models
Exchange Rate
Exchange Rates
External Imbalances
Fiscal policy
Nonoil Developing Countries
Oil Exporting Countries
Taxation
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Beschreibung
Zusammenfassung:This paper examines the relationship between fiscal policy and the current account, drawing on a larger country sample than in previous studies and using panel regressions, vector autoregressions, and an analysis of large fiscal and external adjustments. On average, a strengthening in the fiscal balance by 1 percentage point of GDP is associated with a current account improvement of 0.2-0.3 percentage point of GDP. This association is as strong in emerging and low-income countries as it is in advanced economies; and significantly higher when output is above potential.